Four departments advised Govt against Fuelwatch scheme

Prime Minister Kevin Rudd is trying to play down another embarrassing leak about the Government's FuelWatch program after Channel Nine revealed that four Government departments advised cabinet that a national FuelWatch scheme should not go ahead.

Transcript

LEIGH SALES, PRESENTER: The Prime Minister is trying to play down another embarrassing leak about the Government's FuelWatch program.

Four Government departments advised Cabinet that a national FuelWatch scheme should not go ahead because it could push up petrol prices.

It comes a day after another leak which revealed the resources minister Martin Ferguson also argued against the policy in Cabinet discussions.

Kevin Rudd has acknowledged the departmental advice, but he says the Government is standing by the FuelWatch scheme.

From Canberra, Kirrin McKechnie reports.

KIRRIN MCKECHNIE, REPORTER: It's the second Cabinet leak in as many days and it's twice as explosive as the first.

WAYNE SWAN, TREASURER: Now it's no secret - there are a range of views about FuelWatch.

KIRRIN MCKECHNIE: Certainly not secret anymore.

Channel Nine has exposed advice from four Government departments warning a national petrol price monitoring scheme could actually drive up fuel prices.

KEVIN RUDD, PRIME MINISTER: The Government, as I said in Parliament on Monday, had conflicting advice before it.

We took the advice of the ACCC, because the ACCC was the only body which had done the econometric modelling on the impact of FuelWatch.

KIRRIN MCKECHNIE: The Prime Minister's own office warns -

"a small overall price increase cannot be ruled out".

The resources and energy department states -

"the scheme will reduce competition and market flexibility, increase compliance costs, and has more potential to increase prices".

Finance offers that -

"the introduction of a price commitment rule may result in higher average petrol prices over time as the option may lead to a de facto price floor".

And the industry department is -

"concerned about the anti-competitive effects"

of FuelWatch.

WAYNE SWAN: It is true there was some bureaucratic advice against FuelWatch.

I don't believe that was well grounded, and I believe it was overwhelmed by the advice from the ACCC

KIRRIN MCKECHNIE: It seems carelessness abounds within Government ranks when it comes to sensitive documents.

Lateline has tonight obtained speaking notes for ministers, to use as they go into damage control over yet another highly damaging Cabinet leak.

The notes highlight the criticisms made of FuelWatch and list a string of rebuttals Ministers can use to try to defend the Government's decision.

And they were out in force tonight doing just that.

LINDSAY TANNER, FINANCE MINISTER: We get different points of view put by different departments.

In this instance we had very strong advice from the ACCC, the consumer watchdog, to pursue a particular policy. We've chosen to take that advice and we stand by it.

WAYNE SWAN: We certainly did give more weight to the ACCC because it was practical, realistic advice, based on modelling

KIRRIN MCKECHNIE: It's played into the Opposition's hands.

JULIE BISHOP, DEPUTY OPPOSITION LEADER: Quite extraordinary.

At the end of the day this is about the price motorists are paying for petrol and the Prime Minister is introducing a wasteful scheme that will do nothing to help motorists at the bowser.

And for him to ignore advice from treasury and finance and industry is quite astonishing, and the Australian people deserve some answers.

KIRRIN MCKECHNIE: But some just want the Government to butt out.

DOUG MCMILLAN, TRUCK DRIVER: Canberra needs to focus on the economy and forget about the fuel costs because they will not control it, it's controlled by other forces, not Canberra

KIRRIN MCKECHNIE: Doug McMillan runs a small trucking business from Albury Wodonga.

He has a monthly fuel bill of $100,000.

DOUG MCMILLAN: Fuel for us at the moment is running at about 44 per cent of our earnings, by the time it reaches two dollars it will be up to fifty per cent of our earnings, so it's a huge impost to us.

KIRRIN MCKECHNIE: He warns the industry is nearing crisis point.

But his overseas counterparts say they're already there.

In London, truck drivers staged a disruptive protest as diesel there hit $2.50 a litre.

GARY KEHOE, LONDON TRUCK DRIVER: I will eventually be unemployed with a young family.

And so today we've decided to make a stand against it all, because it can't go on.

KIRRIN MCKECHNIE: Their day long protest appeared mild in comparison.

On the continent, French fisherman have blockaded ports for a week.

On the road, on the seas, and even in the skies.

Qantas has today announced an extensive series of cuts due to a $2 billion blowout in fuel costs.

Across its fleet five planes are being retired, three grounded and a Jetstar order cancelled.

Flights are going too to popular destinations including the Gold Coast and Uluru.

And it warns jobs will go.

TOM BALLANTYNE, AVIATION CONSULTANT: There will certainly be hundreds of jobs, whether it will go into the thousands, I'm not quite sure